Burt Malkiel: For me the best way to keep the cost down and to get not average returns, but to get above average returns, is to make index funds the broad core of every investment portfolio. I do this myself in my own retirement funds. And I think investors who do that are not going to have mediocre performance. That’s what a lot of professional investors tell people, “Oh, no, you don’t want to be just average.”
You won’t be average. You will be above average because the typical actively managed fund underperforms the index fund and the amount of that underperformance is very well estimated by the difference in expense ratios.
